Standing Committee A

[Mr. Jimmy Hoodin the Chair]

Jimmy Hood: Due to technical problems over night, amendment No. 263 to clause 28 was printed incorrectly. Copies of the correction have been distributed to members of the Committee.

Clause 27

Local Housing Allowance

Danny Alexander: I beg to move amendment No. 258, in clause 27, in page 19, line 15, at end insert—
‘( ) The Appropriate Maximum Housing Benefit may not vary according to the age of the claimant.’.
I am pleased to serve under your chairmanship again, Mr. Hood. To continue the meteorological theme, I must say that it is good weather here and, according to what I have been told, it is replicated in the north of Scotland for the first time in our deliberations. I am looking forward to such weather continuing this weekend.

John Robertson: Thank you, Michael Fish.

Danny Alexander: I thank the hon. Member for Glasgow, North-West (John Robertson) for that comment.
The amendment is designed to address an issue that my hon. Friends and I, as well as other hon. Members, regard as important. Its purpose is to provoke a discussion about single room rent, which the Bill will convert to a shared room rate under the new local housing allowance, although the effect of the two is pretty much the same. The Bill will provide tenants under the age of 25 with a considerably lower rate of housing benefit than everyone else. It is my contention that shared room rent should be abolished and that everyone, no matter what age, should have access to housing benefits on the same basis. The single room rent is unfair: it is discriminatory; it causes hardship, poverty and homelessness; and it should be abolished.
I note that early-day motions 816 and 2573 on the subject have between them attracted the support of 169 hon. Members, including, I am pleased to say, the hon. Members for North-East Derbyshire (Natascha Engel) and for Daventry (Mr. Boswell), who are members of the Committee. I hope they will contribute to the debate, because the issue is important for the long term.
Since its introduction in October 1996, the single room rent restriction has limited the maximum amount of housing benefit that a single private sector claimant under the age of 25 can receive for the average cost of a room in a shared property, regardless of the property occupied. In contrast, single people aged over 25can receive housing benefit for one-bedroom, self-contained properties or shared accommodation. Anyone aged under 25 and reliant on housing benefit who chooses to live, for example, in a self-contained bedsit or self-contained, one-bedroom accommodation will find that their benefit does not in any way cover their costs. In fact, even the amount that people receive to rent a single room in shared accommodation is usually insufficient to pay for what is available locally.
The restriction has been carried out in the local housing allowance pathfinder areas where the new benefit has been piloted, and we shall no doubt discuss it in more detail in our clause stand part debate. Unless the Under-Secretary tells us otherwise, it seems that the restriction will be continued under the new title of the shared room rate in respect of the local housing allowance roll-out proposed under the Bill.
Revisions to the definition of the single room rate have been found to have little impact on the problems that young people face because of the current restrictions.

Adam Afriyie: Does the hon. Gentleman share my concern about the implications with regard to age discrimination legislation?

Danny Alexander: That is a relevant point, which perhaps the Under-Secretary will address. I welcome the positive tone of the intervention, because I know that when the single room rate was introduced by the Conservative Government in 1996, it was strongly opposed by Labour Members. It may interest the Committee to know that among those who voted against its introduction were the current Prime Minister, Chancellor of the Exchequer and Secretary of State for Work and Pensions. In fact, I think that any member of the Cabinet who was elected to the House before 1997 voted against it. The Ministers present in Committee today have no parliamentary record on the subject, as they had not then been elected.

John Robertson: And they were certainly not in the Cabinet.

Danny Alexander: Indeed. However, I know that the Minister of State was actively involved in student union politics at the time when the single room rent was introduced, and I should be very surprised if he was not actively involved in campaigning against that.
I make these points because I hope that there are still Labour Members who continue to hold the view held by their hon. Friends in 1996 that the idea that under-25s should receive a lower rate of housing benefit is wrong, discriminatory and unfair, and that it causes hardship to far too many young people. In previous sittings of the Committee, Conservative Members have frequently shown off their new credentials and the new approach by which they are trying to set aside their history and turn over a new leaf. The amendment is a test for them, too, because it is a chance for them to show whether their conversion is real or skin deep—whether it is a matter of presentation, or whether it affects the substance of policy. I hope, therefore, that if the amendment goes to a Division, Conservative Members will support the abolition of single room rent.

Jeremy Hunt: To clarify matters, is the hon. Gentleman saying that all that we have said to date in Committee would go only skin deep, if we were not to support the amendment?

Danny Alexander: I do not want to try the Committee’s patience, but what I am saying is that the substance of policy is the ultimate test of political conviction. The amendment is about policy substance, so I look forward to hearing the Conservative response, although I do not know which Front-Bench spokesman will make it.

Tim Boswell: I hasten to disabuse the hon. Gentleman of the idea that I shall be making a substantive response to the debate, but as I almost certainly voted for the provisions in 1996, I shall take a moment of the Committee’s time to remind him—I am sure that he was coming to this—that it would assist the Committee if he were to identify the likely cost of the change. As the amendment is also signed by the hon. Member for Yeovil (Mr. Laws), who is, or who sets himself up as, a pillar of fiscal rectitude, perhaps he will explain how the cost will be met.

Danny Alexander: The hon. Gentleman has raised an important point, which I shall come to, because the question of cost has been specifically identified in written answers over the past year or so.
Specific problems that are caused to young people by the current single room rent rules will, I believe, continue under the Bill. Eighty-seven per cent. of single room rate claimants experience a shortfall between the housing benefit that they receive and the rent that they pay. According to Shelter’s calculations, that shortfall averages £35.14 a week, which is substantial.
The last written answer that I have seen on the subject dates from May 2005 and states that 11,990 people were in receipt of the single room rent. There is a severe shortage of accommodation available to people under 25 that meets the single room rent or the shared room rate definition. That causes a real problem for those charities that are working with young homeless people, because it is often hard, if not impossible, to move those people on to accommodation that is appropriate to their needs.
At a seminar on this matter hosted by a coalition of charities including Shelter, I attended a presentation by young people who were in YMCA hostel accommodation because they had been unable to meet their rent due to the shortfall in the single room rent. The current arrangements for housing benefits for under-25s can be a real disincentive for young people to leave supported accommodation, as those young people know that they will face a shortfall. In 2005, YMCA England surveyed 23 local YMCAs, and it identified the single room rent as a significant barrier to people moving on from YMCA accommodation. Some 35 per cent. of young people in YMCA accommodation were ready to move on but were unable to find anything affordable to rent, given the benefit situation.
Affordability is not the only barrier facing young people. There is substantial evidence that landlords are unwilling to let to under-25s on benefit because they know about the benefit situation and the fact that many of those young people will face shortfalls. They know that that may cause debt, hardship and an inability to meet rent payments, which from the landlords’ point of view can cause severe difficulties. Shelter has carried out research which shows that while 46 per cent. of one-bedroom properties were affordable to those entitled to the one-bedroom rate for over-25s, only 26 per cent. of properties that matched the shared room rate definition were at or below the shared room rate of housing benefit.
That research related to the local housing allowance pathfinder areas, which is where the Government have been trying out the new system proposed in the Bill. The Minister may seek to allay my fears by saying that under the new system there will be an improvement in the position of under-25s, but Shelter’s research found that even under the new system only 26 per cent. of accommodation in the pathfinder areas was affordable to those people in receipt of the shared room rate.
The single room rent also applies to pregnant women. Once the baby is born, the restriction no longer applies, so more housing benefit is available. However, it is particularly difficult for a young person to find and manage a move to more suitable accommodation with all the extra costs and changes at that time. The Minister of State rightly made great play of the importance of tackling child poverty during our deliberations on part 1 of the Bill. I would argue that these provisions have a damaging impact on child poverty for all the reasons that I have just described.
I will not go through the various case studies, although they are instructive. I am sure that all members of the Committee will have been supplied with briefing material and information that gives detailed case studies of people under 25 who are in severe hardship as a result of these restrictions. I shall simply highlight a couple of extra points. The single room rent or the shared room rate is particularly problematic for people for whom shared accommodation is not suitable and would create difficulties, for example, people, who are undergoing rehabilitation for an alcohol or drug problem.
The hon. Member for Daventry raised an important point about the costs of abolishing single room rent and extending the housing benefit provisions to people under 25. In April 2006, in a parliamentary answer to the hon. Member for City of York (Hugh Bayley), the Under-Secretary of State for Work and Pensions, the hon. Member for Warwick and Leamington (Mr. Plaskitt), said that to abolish the single room rent would cost
“at least £20 million per year”.—[Official Report, 18 April 2006; Vol. 445, c. 407W.]
Other estimates have suggested £60 million a year. It may be somewhere between those two figures.

Tim Boswell: The hon. Gentleman suggested that many landlords are reluctant to make such lettings at present. Does he appreciate that there could be a dynamic effect if the proposal were accepted, because more young people would take that opportunity and the cost would be upwards in the spectrum rather than the somewhat conservative estimate of Ministers?

Danny Alexander: The hon. Gentleman is right to refer to the dynamic effects, but there would be at least as powerful a dynamic effect, or an even greater one, in the opposite direction. After all, these young persons are trapped in hardship, their debts are building, they are moved between temporary accommodation and they may be living in a hostel. Finding employment, the subject of part 1 of the Bill, is harder and making ends meet is harder. It is possible to foresee dynamic effects in the opposite direction. Making provision that allows young people to have a more stable footing in life means that the majority of young people who need the assistance of housing benefit can afford to live without having a dramatic shortfall in their benefits. That may well lead to much more positive economic benefits, which would more than counteract the effects that the hon. Gentleman, legitimately, described.
The hon. Gentleman asked where the money would come from. Abolishing the single room rent is Liberal Democrat policy, as it was at the last election and will be for the foreseeable future. The policies were set out in a carefully costed manifesto. He rightly referred to my hon. Friend the Member for Yeovil, who is indeed a pillar of fiscal rectitude, a characteristic that I try to emulate. [Interruption.]

Jimmy Hood: Order. I am trying my best to listen to the hon. Member who is addressing the Committee and I hope that other hon. Members are doing the same.

Danny Alexander: Thank you, Mr. Hood. In response to the Minister’s comment from a sedentary position, wanting to make one’s sums add up does not necessarily make one a right winger; if it did I suspect that he would be in the same bracket.

Jeremy Hunt: The hon. Gentleman said that the proposal to abolish the single room rent was part of the last Liberal Democrat manifesto, and fully costed as such, but that manifesto talked about increasing the top rate of tax to 50 per cent., a pledge that the hon. Gentleman’s party has abandoned. Can he really say that it is still a fully costed proposal?

Danny Alexander: Yes, I can. You would not wish me to try the patience of the Committee by going into details of the full range of Liberal Democrat policy commitments, Mr. Hood, or our spending and taxation pledges.

Jimmy Hood: Order. The hon. Gentleman may try the patience of the Committee, but he should be careful not to try the patience of the Chairman.

Danny Alexander: Thank you, Mr. Hood.

Tim Boswell: I was at pains to point out that the absent but nevertheless thoroughly honourable Member for Yeovil claimed fiscal rectitude, but it is a matter for the parliamentary record that the last time that I debated a similar work and pensions issue with him I had to describe him, with regret, as fiscally incontinent.

Danny Alexander: There is not much that I can say to that.
The point that I am making is that the injustice embodied in the Bill in the single room rent and shared room rate is substantial. The cost is relatively small, and the Government could send a significant signal that they do not wish to trap in poverty young people who require the assistance of housing benefit, to fuel such young people’s debts or to force such young people out of rented accommodation into hostel accommodation or, even worse, homelessness. For a relatively small amount of money, a positive signal could be sent.

John Penrose: Will the hon. Gentleman clarify one point about the principle underlying his amendment? Is he objecting in principle to a single room rent being set at some level, if it is sufficient to cover the genuine costs? In other words, is he objecting in principle to people of a certain age living in houses in multiple occupation of adequate quality, or to the fact that the system is not working in practice because the single room rent is set too low? If that is the case, and if the new arrangements are correctly executed and the local housing allowance is set at the right level, his objection would vanish and there would be no need for his amendment.

Danny Alexander: The hon. Gentleman has made a thoughtful point. I do not see any justification for discrimination on grounds of age in the housing benefit system. People of all ages might well wish to live in shared accommodation, but the fact that people under 25 are effectively told, “You will only get housing benefit if you live in shared accommodation; it is the only acceptable form of accommodation for you for which we will provide housing benefit,” is wrong. That is what I object to, and I have explained my reasons at some length.

John Penrose: If that is the case, does that not mean that the hon. Gentleman would not back any notion of a local housing allowance for HMOs and that HMOs would therefore vanish as a type of housing provision for anybody of any age?

Danny Alexander: Currently, 87 per cent. of all single room rate recipients face a shortfall. That shortfall averages £35.14 a week, but if one looks at written answers throughout the history of the single room rate, one sees that the number of recipients has fallen dramatically from 35,000 in 1996—that is from memory, as I do not have the written answer before me—to just over 11,000 today. The effect that the hon. Gentleman has described may already be taking place.
I am making a point about treating young people fairly in relation to housing benefit. What sort of accommodation they live in should be a matter for them, and housing benefit should be available on that basis, and not on its current discriminatory basis. I hope that the Committee will support the amendment and bring that injustice to an end.

David Ruffley: This is undoubtedly an important issue. The groups that have examined the Bill have briefed many Committee members from all parties. Undoubtedly, very many people under 25 are in hardship, so we must take the matter extremely seriously.
One of the key criticisms made by Shelter, citizens advice bureaux and others is that there is a lack of accommodation that meets the SRR definition and housing benefit levels. Recent figures from the Association of Residential Letting Agents suggest that the multiple sharer market is decreasing, which it almost certainly is. For instance, houses in multiple occupation make up only 6 per cent. of the rental market compared with 9 per cent. in the previous two quarters prior to this autumn—the figures are from the Estates Gazette.
Shelter’s research into rent levels in the local housing allowance pilot areas found that while 46 per cent. of one-bedroom properties advertised—in other words, properties outwith the SRR market—were affordable to those entitled to the one-bedroom rate, only 26 per cent. of properties matched the shared room rate definition or were below the shared room rate levels in those pilot areas, which is a startling disparity.
In exploring the reasons behind the decline in houses that meet the SRR levels in the pilot areas, the Council of Mortgage Lenders has highlighted the growing burden of Government initiatives and regulations in the private rented sector. That is not support for the landlord class, if I can lapse into Marxist terminology, which I know that the Minister will remember from his youth.
The Minister for Employment and Welfare Reform (Mr. Jim Murphy)indicated dissent.

David Ruffley: Will Committee members catch up? The Minister was a distinguished head of the National Union of Students, and we all like reading his early musings on the nature of political life—I often read them late at night just to cheer myself up.
It is not only the modern Conservative party that has moved on—we have conceded that our opposition to the minimum wage was the wrong decision—and I am glad to see that the Minister has also moved on and had an interesting political journey. However, I am digressing in ways that are unhelpful to our proceedings.
The comments made by the Council of Mortgage Lenders are important in this key issue, on which I hope that we have a decent debate today. Supply is not just about benefit levels, and it is not just a welfare problem, because it is also a problem for Ministers in the Department for Communities and Local Government. The Council of Mortgage Lenders has said that
“As a result of the Housing Act 2004, private landlords are confronting licensing of Houses in Multiple Occupation”,
which is high regulation,
“selective licensing of the wider PRS, compulsory tenancy deposit schemes and the implications of health and safety rating”.
There is a problem with the amount of housing stock available in the deregulated private rented sector, which is critical to the amendment we are discussing. In one of the final evaluation reports of the pathfinders, it was said that overall it is
“possible to conclude that although the introduction of the LHA has not resulted in a substantial reduction of lettings overall to claimants ...The LHA comprises a distinguishable factor in the reduction of lettings to claimants with landlords and lettings agents being particularly concerned about the accrual of arrears...Inevitably, the current plans to roll out the LHA nationally will cause some review of lending policies in this area to reflect the higher financial risks for landlords and this will contribute to a reduction in the level of investment”
in the housing benefit sub-sector of the private rented sector.
The important point in this section of the final evaluation report is troubling, and it has been backed up by the British Property Federation, which has stated that
“many of our members are reluctant to let to under 25s because of the inadequacy of their HB payments to meet the rent required. This is reflected in the DWP statistics which show that the number of claimants assessed under the SRR rules has fallen from 31,600 in 1997 to 11,990 in 2005.”
That is an amazing statistic, and I would be grateful if the Under-Secretary of State for Work and Pensions, the hon. Member for Stirling (Mrs. McGuire) were to comment on it. It prompts the question: where have all the claimants gone?

Anne McGuire: Into jobs.

David Ruffley: The Under-Secretary can answer that question, if she catches your eye, Mr. Hood—I have due respect for your office, as indeed we all do.
It would be interesting to know why the number of claimants has fallen. If it is because under-25s are going for better properties because they can afford higher rentals, it is a good thing. However, that statistic needs to be explained, and I will be interested to hear the Under-Secretary’s response.
The YMCA said that 35 per cent. of young people in its accommodation wanted to move into their own accommodation but were unable to find anything affordable to rent. In the spirit of consensus that I am going to lurch back into, I imagine that that figure would not have been dissimilar before 1997. However, the Government have been in office for nine years, and I wonder whether they recognise that YMCA statistic and what they want to do about it.
Bearing in mind the trends highlighted by Shelter, citizens advice bureaux, the British Property Federation, the Council of Mortgage Lenders and others, what assurances can the Under-Secretary give that the further roll-out of the LHA will not be accompanied by a decline in stock suitable for SRR claimants? We also welcome what I believe is an overall decline in demand for discretionary hardship payments, although the problem is that it relates to the number of applications across the board. My understanding is that the number of applications from under-25s remains unchanged in the pilot areas, so is it correct that nothing has changed?
Shelter and CAB have picked up on three DWP reports on the evaluation of the LHA. The reports specifically highlight the position of under-25s in relation to rent officers, which is another important issue. One of the reports states:
“Rent Officers in some of the areas were facing particular difficulty in gathering evidence in order to set the shared room rate.”
The Under-Secretary and the Government should be given credit for piloting an innovative scheme. The LHA has had success and Conservative Members are not challenging that. However, the data in the evaluation report raise many unanswered questions. The report continues:
“This could mean that as a result the rate is a less reliable reflection of the market, thus compounding claimants’ problems.”
That suggests a lack of truly reliable evidence from the pilot areas. Will the Under-Secretary assure us that she and her officials will look carefully at the findings of rent officers?

John Penrose: Will my hon. Friend accept that it looks strongly that there is an argument for saying that rent officers have for some time been getting this wrong in that the levels are being set too low, and we know that that causes hardship. That is having a knock-on effect on the supply of housing in multiple occupation, about which he has been talking. Ever since the idea was first introduced, it has had the unintended effect of the progressively worse shortfalls that have been mentioned. That indicates that rent officers are clearly getting things consistently wrong.

David Ruffley: My hon. Friend makes an excellent point. The Under-Secretary will be able to say whether rent officers are getting things wrong consistently and on a widespread basis, but the issue has been flagged up in the evaluations of the pilots. Much good has come from those pilots. The point bears specifically on the amendment and on the plight of the under-25s.
My hon. Friend the Member for Weston-super-Mare (John Penrose) and I are drawing attention to a particularly important point. The issue is not just one relating to benefits; it is a housing supply issue too. We all know about the limits of government, and the issue is not one that any Government of whatever political persuasion can tackle by waving a magic wand. Nevertheless, I should like the Under-Secretary to explain her understanding of the policy response to the supply shortage—for the kind of property with which those subjected to the SRR have to deal.
The treatment of claimants who are under 25 is widely argued to be no fairer and just as inequitable under the pilot schemes as under existing housing benefit regulations, which cause great difficulty for that age group. The LHA rates in most pilot areas are believed to be fair, across the piece. In general, it appears that objections to the rates that have been set are not widespread, but the rates for shared rooms—which apply to under-25s—are an exception. That is a very large “but.”
The questions that I have raised are not about the principles so much as about the mechanics. Will the Under-Secretary say what discussions her Department has had on the supply side with the Secretary of State for Communities and Local Government? Parenthetically, I should like to endorse the points made by the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander), and by Shelter, Crisis, and many others about the particular position of pregnant women in relation to single room rate.

Alison Seabeck: Single room rate has been a cause for concern ever since it was introduced in 1996, and those of us who have been involved in the housing world behind the scenes at Westminster have felt that there are issues about it. Abolition may be one solution.
I should like to put the amendment into context. The rationale given by successive Governments was that the measure encourages young people on benefit to follow the example of those who are in work. Figures have suggested that 60 per cent. of under-25s share accommodation in the private sector, and it was therefore thought reasonable to expect benefit claimants to do the same. As well as anticipated savings in Government expenditure, there would be an incentive to people on benefit to look towards obtaining work.
The measure introduced in 1996, which many of my hon. Friends thought was flawed, was changed pretty quickly after the Labour party came to power in 1997. It was tweaked, making it a little fairer, but still the restriction affecting under-25s remained. Under continuing pressure from groups such as Shelter and Crisis, the Government undertook reviews of the single room rent, none of which came down firmly on the side of abolition. None the less, they expressed concern and were in part critical of the current arrangements, which we are now considering as we debate the amendment.
The research report No. 243 by the Department for Work and Pensions, entitled “Research into the Single Room Rent regulations”, concluded that the SRR had not been effective in encouraging claimants into shared accommodation. That, in part, is why I am tempted to speak to the amendment, and to probe the Under-Secretary a little further. The report showed that the number moving into such accommodation fell. If the aim was to encourage those on benefit to share, as those in work appear to be willing to do, the approach has not been a huge success.
There is evidence to suggest that those who are in work and who choose to move into shared accommodation often do so because they are moving in with friends. That is not a luxury often afforded to someone on benefit, who may not have such extended choices, and therefore it is not an encouragement to move into shared accommodation. The report also acknowledges that, because of the slightly more generous SRR post-2001, a small number of housing benefit claimants opted for self-contained properties. However, on the whole that option is not open to them. 
Perhaps I may touch here on the point made by the hon. Member for Bury St. Edmunds (Mr. Ruffley), when he mentioned the concerns of the Associationof Residential Letting Agents about landlords and houses in multiple occupation, and the additional burdens that are being faced. ARLA is a highly reputable organisation and has been very constructive in supplying evidence to the Committee. However, Iam not entirely sure that the hon. Gentleman seriously means that regulations on houses in multiple occupation, which bring those houses to a safe,clean standard, would be inappropriate, given that most of the people who enter them are in receipt of the SRR.

David Ruffley: I was quoting a reason why landlords in commercial business were not expanding their business, and why the housing stock was not growing. Certainly, as to the point that the hon. Lady was more than hinting at, we do not want Rachmanism or poor-quality housing. I was merely suggesting a possible reason for a shortage of appropriate property; but I also say that it is for landlords to get their business model right and to make sure that they let good property. However, there is a problem and that is part of it.

Alison Seabeck: Given that there is potentially a market for shared accommodation of the type in question, for people in work or out of work and on benefit, a better quality product might mean increased demand; the effect is not necessarily wholly negative.
I want to return to the point that the SRR does not have a wholly desirable effect as far as encouraging young people into work. I recently listened to two young men who were living at the YMCA because, despite having been keen to work, and having found jobs, they could not meet the shortfall between their benefit and their rent, and were evicted from their homes. They subsequently lost their jobs and got into further difficulty. Both are now back in work but are still unable to afford a place to live, and are still at the YMCA. The whole process is deeply unsettling and we are, indeed, pushing young people into low-level mental health problems because of the stress that results. That, in turn, makes it more difficult for them to get access to the labour market. The circle needs to be broken, and I am not sure that the SRR assists with that.
In this context, will the Under-Secretary comment on concerns raised in the “Care Matters” Green Paper about care leavers’ fears of homelessness? Many young people who come out of care are likely candidates for SRR; the uncertainty and the shortfall in their rent are clearly not helpful.

Natascha Engel: I asked a parliamentary question in May about the same issue and the DWP report. It states that all care leavers and disabled people should be exempt from the single room rent restrictions. Will my hon. Friend deal with that issue in her question to the Under-Secretary?

Alison Seabeck: I should very much like the Under-Secretary to consider that. It is one of the issues that would lead me, if the amendment were pushed to a vote, not to vote for it. There are several questions to which I should still like full answers.
I wish to read out to the Committee a couple of brief case histories that were published in the magazine Roof this month, because they highlight the nature of the problem for young people who are trying to move into work. The first case touches on the availability of accommodation. A young man from Newcastle said that only three places were available
“out of loads of ads”.
He said that they were asking for £450 a month, but that he could claim only £180. He was clearly unable to access accommodation.
The second case concerns a young women called Tamara who left short-term accommodation at the YMCA when she got a job. However, she was forced back after seeing that restrictions on her benefit meant that she could not survive in the private rented sector. She even spent time, because she had no accommodation, in a mother and baby unit despite the fact that she did not have a baby. I am sure that Ministers do not intend such circumstances to arise.
There continues to be tension within the Government about the view that to do away with the single room rent or the shared room rate would encourage young people to live on benefit and not seek employment. Furthermore, it is felt that those on benefit would seek better accommodation than those who had found work and that that would result in unfairness.

Danny Alexander: The hon. Lady referred to employment, which, in part, is the subject of the Bill. Does she agree that young people in the circumstances that she has described will often find it harder to find work because employers sometimes require evidence of where a person lives? If people are moving between accommodation, such details can be harder to provide. In many cases, the fundamental objective of welfare reform, which is to get more people off benefit and into work, is being undermined by the single room rent.

Alison Seabeck: The hon. Gentleman makes a fair point. The importance of an address has been raised by organisations that are involved in housing and homelessness. Some employers know the whereabouts of shared room accommodation and houses in multiple occupation and are therefore more reluctant toemploy young people in those circumstances. I shall come back to those on benefit who seek better accommodation than those in work, and the resulting unfairness. The latter argument was put forward frequently in 1996.
One of the other reasons that has been cited for the ongoing need for the regulations is that to remove them would lead to abuse. Many organisations involved in housing and homelessness say that most people on benefit are not renting homes that are larger or more luxurious than they need. In fact, the opposite is usually the case. I suspect that most of those who are eligible for housing benefit, especially young people, are not looking to manipulate the system in that way, just as the majority of taxpayers are not seeking to avoid paying tax.
It is difficult to get away from the evidence that, in the local housing allowance evaluation areas, the fall in the number of people experiencing a shortfall between their benefit payments and housing costs is small and that the shortfall remains stubbornly high with an average gap of about £27 a week. I must say in fairness that such figures are not those of the DWP, but of the citizens advice bureaux. Within the evaluation areas, there were variations in the reduction, too. I welcome the Under-Secretary’s comments on the reasons for that. Was it down to the type of advice that was being offered? Was it down to the response of landlords?
We have touched on the role of landlords and their becoming increasingly unwilling to let to those who are claiming single room rent. The supply issue has been well discussed by the hon. Member for Bury St. Edmunds. I accept that such matters genuinely exercise Ministers and I appreciate that it is unlikely that total abolition will be possible, but has any work been done in the Under-Secretary’s Department on the breakdown of the age group of those claiming that particular benefit? How does the age breakdown relate to whether or not the young people are in employment? There might be a case, for example, for lowering the top age end of the benefit. Are young people who are affected by the regulations more likely to be in the world of work if, say, they are over the age of 21?
If getting young people into work is one of the key factors in keeping the regulations in place and if the evidence shows that a significant proportion of young people over 21 or 22 are in work, perhaps the regulations are inappropriate and fears about benefit abuse are less founded. I should be grateful if the Under-Secretary could look into such matters. If the evidence is not available, perhaps there can be further consideration in another place of the thorny issues raised by the amendment. I question whether the age restrictions can be tweaked further to meet the genuine cost, outside organisations’ concerns and the Government’s concerns about risk of abuse.

John Penrose: I should like to pick up on some points, particularly those made by my hon. Friend the Member for Bury St. Edmunds about the mechanics of the process. We have heard a great deal about the real hardship caused by the single room rent restriction. It sounds like we are in a vicious circle. Shortfalls in rent mean that people cannot find places to live of adequate quality and plenty of landlords are unwilling to make places available, because they know that they will not get as much financial return from such rentals as developing a house for another form of occupation.
Has the Under-Secretary of State considered, and can she offer some reassurance on, the financial implications? We have heard a lot about fiscal continence and the implications of the amendment. What calculation has the Under-Secretary done to work out what would happen if the new system started to get it right in terms of rent officer determinations and the single room rate started to rise in those areas of the country where there was a supply shortfall? If that happened, the supply of places would increase and come on to the market, more landlords would be creating high-quality houses in multiple occupation and fewer people would be suffering from the shortfalls that are the cause of the hardship we are talking about.
On the assumption that the Under-Secretary has thought long and hard about the financial implications, I presume that those will have been built into the Government’s figures and estimates of the cost of the total package. Will she say what she expects that cost to be? I am sure that it is not revenue neutral. If rent officers start to get it right and set a more realistic level in areas of the country where it is important that they do so, much of the hardship could be sorted out through the natural operation of the new proposals. Subsequent amendments on transparency of rent officer determinations may help in that regard.
If the Under-Secretary tells us what the financial implications are, that may go a great way towards reassuring Committee members that the majority of the shortfall, and therefore the financial hardship, will be dealt with, whether or not the amendment is agreed to.

Jeremy Hunt: Will the Under-Secretary clarify one point about which I am concerned? She will know that one of the most important sections of “Improving the life chances of disabled people”, the report by the Prime Minister’s strategy unit, was about improving transition planning for disabled people between childhood and adulthood. Such planning is often poor. In particular, the transition between children’s and adults’ services is not carefully managed. Adults’ services often only find out a few months in advance that they will have to look after X number of disabled people, and the crucial planning does not happen.
Given that the disability agenda is moving strongly and firmly towards independent living, is the Under-Secretary concerned that the single room rate for people under 25, as it applies to disabled people or those with limited capability for work—the subject of earlier discussions—might make it more difficult for people to get the independent accommodation that they need if they are to live independently? If that is so, harking back to our earlier discussions, disabled people may find it more difficult to get into part-time or full-time work, which is the next step after being able to live more independently than they have been able to previously.

Anne McGuire: I am pleased that we have had such a wide-ranging debate. In a strange way, although I will ask the hon. Member for Inverness, Nairn, Badenoch and Strathspey to withdraw the amendment, I welcome that fact that it was tabled because it will allow us to go through some of the specific concerns that have been raised by Opposition Members and my hon. Friends. I hope that I can thereby reassure them about the new shared room rate and the way in which it will operate.
Can I say at the outset that this is not primarily about tackling abuse in the system? It is part of a package that is intended to make housing benefit more transparent and more understandable to people. All of us who have constituency issues relating to housing benefit will know that in some situations it can appear almost Byzantine in its operation. So it is part of our simplification process. It is a simplification not just for the professionals involved, but for the benefit recipients who find it almost impossible to know in advance what they will receive in housing benefit or, as we will call it, local housing allowance for those in the private sector. I hark back to our short debate on Tuesday evening: the new local housing allowance applies only to those in the private rented sector.
The hon. Member for Inverness, Nairn, Badenoch and Strathspey—I like to say that at least once a sitting. Those of us who know about the wolf of Badenoch know why it is important now and again to mention Badenoch. We might otherwise wake up in the middle of the night with nightmares about the wolf of Badenoch. For the benefit of those who come from south of the border, we can explain that little piece of Scottish history later. [Interruption.] Perhaps it might have been more appropriate for Hallowe’en rather than 2 November.
Let me put the whole issue in context. The hon. Gentleman got the numbers almost exactly right. The improvement on the single room rent will impact on 12,000 single young people under the age of 25. That 12,000 is out of some 800,000 recipients. The general concerns are about whether it will impact to the disadvantage of young people who are in the private rented sector, so it would be appropriate if I put on record the changes and improvements that we are making.
Previously under the single room rent there had to be shared accommodation. When setting the single room rent, a rent officer had to take into account that while the individual had exclusive use of a bedroom, they had shared use of a living room, a bathroom, a toilet and a kitchen. Our improvements will mean that, under the new shared room rate, the tenant has the exclusive use of one bedroom and the shared use of either a kitchen, a bathroom, a toilet or a living room. There is only one shared element, which I think is a significant change in the way that we currently operate.

Danny Alexander: The Under-Secretary is quite fairly describing the changes that the Government are making to the shared room rate and the access to a shared living room. Would she, on grounds of fairness, also refer to the research that was commissioned by the DWP itself to explore the impact of that change? It concluded that it
“made no appreciable difference to the supply or quality of accommodation to young claimants or their ability to access it”.

Anne McGuire: I obviously recognise that piece of DWP research. Although the hon. Gentleman is perhaps using it in a negative sense, it answers some of the concerns raised this morning. There has been no negative impact on the amount of accommodation available to young people under the new system.
I shall pick up on a point that my hon. Friend the Member for Plymouth, Devonport (Alison Seabeck) made on the impact of the new allowance for single room rent on working and non-working individuals. I think that that is an important issue, which is why we have linked it into the Bill. She mentioned that there could be a disincentive to move into employment.
I shall paint a couple of scenarios—sometimes I think that it is easier to understand when we imagine what might happen in practice. Currently, if a young, unemployed person claiming jobseeker’s allowance is passported on to housing benefit, as a single under-25-year-old, they would be entitled to a shared room rate, which let us say is £80 a week. If the weekly rent for his room is £70, it would be covered by his housing benefit. That young person shares with someone in employment who is earning £250 a week and therefore not entitled to housing benefit, but who can meet the £70 a week rent within his or her income.
Let us imagine that we accepted the amendment tabled by the hon. Member for Inverness, Nairn, Badenoch and Strathspey and abolished the shared room rate. Person A would be entitled to a one-bedroom, self-contained accommodation, which for that area might cost £100 a week. Those costs would be met through housing benefit or local housing allowance because it is in the private sector. However, let us imagine that person B—the flat sharer—is still employed at £250 a week and has to move out of the shared accommodation. He still earns too much to be eligible for housing benefit and so has to find that £100 a week. In that scenario, the single under-25-year-old in employment would be the only person disadvantaged. We are trying to strike a balance, not undermine young people and their ambitions. We want the allowance, linked in with other elements in the Bill, to ensure that young people have the right incentives to think about moving into employment.
I shall deal, however, with some of the special cases raised by hon. Members. My hon. Friend the Member for Plymouth, Devonport asked about young people in care and the hon. Member for Inverness, Nairn, Badenoch and Strathspey and other Opposition Members raised similar issues about those facing difficulties. I can confirm again for the record the kinds of tenants who are currently exempt from the single room rent and who will be exempt from the new allowance: local authority and many housing association tenants, as we have confirmed already; tenants in supported accommodation, which might reassure the hon. Member for South-West Surrey (Mr. Hunt); and customers entitled to the severe disability premium.
Furthermore, certain care leavers under the age of 22 will also be exempt. As most people come out of care between the ages of 16 and 18, they will have four years to make the necessary adjustments. Even when specific issues are not dealt with under those categories, local authorities have the discretionary housing payment scheme that allows them to give additional financial support when a person’s situation is not covered by the local housing allowance.

Tim Boswell: Would that cover ex-offenders, whose need for decent accommodation is extremely important in their rehabilitation?

Anne McGuire: I do not want to go into categorisations, because a specific issue would then become general policy. However, I highlight the fact that a discretionary element is available to local authorities. The discretionary element is co-funded by local authorities and the Department to ensure that there is a support blanket in case the local housing allowance does not cover the more difficult situations. I hope that that allays the concern of the hon. Member for South-West Surrey.
All hon. Members who have spoken have said that they are concerned about the supply of shared accommodation. I confirm that in the pathfinder areas the supply of shared accommodation has not changed in any respect.

David Ruffley: The Under-Secretary has made the point for us. The under-supply is potentially driving up rents, which is leading to shortfalls for the under-25 target group. The point is not that supply has stayed the same, but that it is not going up.

Anne McGuire: There are all sorts of reasons why the market makes adjustments. The concerns that have been raised this morning are not just about increasing supply. We have had extensive discussions with the Department for Communities and Local Government, because we recognise that there is a wider agenda on housing supply.
Hon. Members are worried that the new approach will depress supply, but that is not the case. We estimate that the introduction of the median approach to calculation will ensure that instead of 26 per cent. of shared accommodation being available under the single rent, about 50 per cent. of accommodation will qualify for the new allowance.

David Ruffley: Does the Under-Secretary agree as a matter of logic that if the supply of SRR standard accommodation goes up, shortfalls will decrease?

Anne McGuire: I think that I agree with that point, but I am not sure whether I should, because it came from the hon. Gentleman. I think that the issue concerns supply and demand. As a historian, my economics are pretty shaky.
Danny Alexanderrose—

Anne McGuire: The hon. Gentleman has a far more cuddly reputation.

Danny Alexander: The Under-Secretary has once again betrayed her close understanding of the operation of markets. The position that the hon. Member for Bury St. Edmunds has outlined may be correct in terms of economics, but can the Minister explain how the proposed change will lead to a substantial increase in the supply of appropriate accommodation? Is it a change that has not been made in the pathfinder areas but that will be made as a result of the roll-out? In other words, will the policy that has been pursued in the pathfinder areas be amended? The Shelter research that I quoted refers directly to the pathfinder areas, where only 26 per cent. of SRR accommodation is affordable.

Anne McGuire: We can all bandy around statistics and various approaches to economics. We are in the presence of the Minister for Employment and Welfare Reform, who is at pains to tell me that his views have not radically changed since he was not only a National Union of Students activist, but its president, who is well remembered from all those years ago.
Returning to supply and demand, we should not say that the housing market is uniform across the whole country, because it is not. There are different types of markets in my hon. Friend the Minister’s constituency, my constituency and the constituency of the hon. Member for Inverness, Nairn, Badenoch and Strathspey. There is a danger that we will start to look at the housing market as a homogenous market in which the levers of supply and demand work in uniformity. The increase in supply, if I remember my economics correctly, could mean that rents become lower rather than higher.

Kali Mountford: I want to ask the Under-Secretary about the medians that she has referred to and lay down a marker for the clause stand part debate in which I hope to speak, if the Chair allows. Is it not right to look at the median as the total amount of rent payable in an area rather than the median of the rent decided upon by rent officers, which often excludes the extremes of the lowest and highest rents and changes the median point?

Anne McGuire: I am glad that my hon. Friend gave me advance warning of that question. We will return to it in the clause stand part debate rather than discussing it now, because it is slightly off our discussion, although it is adjacent to it.
I appreciate that time is limited before we have to adjourn, so may I give one or two other reassurances? On age discrimination, it is a long-standing principle of the benefit system that different benefits are paid for different purposes at different times in a person’s life. I have a couple of other points which I hope will give some comfort, particularly to my hon. Friends, who I know from their backgrounds and campaigning activities may still have some concerns.
We will continue to consider the detailed aspects of the local housing allowance shared room rate as we look at the final evaluations in the pathfinder areas and develop the regulations. Having said that, I will be frank with the Committee that the core principlesfor retaining the shared room rate—challenging dependency and encouraging young people to think about their future job prospects—link in with some other aspects of the welfare reform Green Paper, which is about supporting people into work.
Ending on a positive note, I am delighted to be able to say in response to the refrain of the hon. Member for Bury St. Edmunds, who asked where have all the young people gone, that they have gone to jobs, 1 million of them, everywhere.

Danny Alexander: I will be brief. The Under-Secretary’s response did not reassure me on the grounds of principle or practice. Her argument seemed to be that things would not get any worse under the new system, but I want things to get a great deal better. Abolishing the single room rent would allow that to happen, and I shall therefore press the amendment to a vote.

Question put, That the amendment be made:—

The Committee divided: Ayes 2, Noes 9.

Question accordingly negatived.

It being twenty-five minutes past Ten o’clock,The Chairmanadjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at half-past One o’clock.